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Holding Crypto Assets And Stocks? There's Now A Platform To Manage Both

Bitcoin, a type of cryptocurrency, uses peer-to-peer technology to operate with no central authority... [+] or banks. Bitcoin's recent rise and booming investor interest is forcing the regulatory and stock market authorities to formulate an official position on bitcoin and other virtual currencies. (Photo credit should read JUSTIN TALLIS/AFP/Getty Images)

A stock trading platform with algorithmic recommendations has just made it easier to manage cryptocurrency holdings alongside traditional financial securities.

New York-based Commandiv recently launched a Coinbase integration feature that allows investors to trade stocks, funds and cryptocurrencies on a single platform and through one account. Coinbase operates one of the largest Bitcoin exchanges in the United States.

“The idea is managing your wealth together in one central fashion, where you can buy and sell stocks, buy and sell crypto assets, while getting trade recommendations on all of them,” says Commandiv CEO and Co-Founder John Zettler, billing the combined crypto and stock trading platform as the first of its kind. “Commandiv is out to serve a new generation of wealth, one that sees the future in cryptocurrencies as much as in traditional brokerage,” the firm said in a Tuesday statement.

Attune to the cryptocurrency market’s instability of present, Commandiv’s portfolios are designed with volatility in mind. Users begin by filling out a questionnaire that assigns them a risk tolerance metric, dubbed a “grit score,” which is then used alongside the information provided to determine a recommended target portfolio for the client’s securities. Meanwhile on the crypto side, clients indicate desired percentage holdings for supported cryptocurrencies.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

“Once you’ve made your target portfolio, we then constantly monitor your account’s investments and push the trades you need to move back into alignment with your target,” says Zettler, a former investment analyst for Morgan Stanley and New York hedge fund SeaStone Capital. “You’re the portfolio manager, and our software is the analyst and trader.”

Reflecting Coinbase’s own crypto offerings, SEC-registered Commandiv supports Bitcoin, Ethereum and Litecoin holdings. As of press time, Coinbase had not returned a Monday request for comment.

Commandiv’s Coinbase integration has been active since last month. But despite the platform’s current crypto direction, Zettler’s original intention wasn’t to create a cryptocurrency and stock trading platform. When Commandiv, which currently claims about $500,000 in assets under advisement, initially launched in June of last year, it was a securities-only product -- but that limitation left out a large pool of clients’ actively traded holdings.

“We just kept hearing, ‘crypto,' 'crypto,' 'crypto’ from our clients -- so much that we ended up doing a survey where we found out that about 75 percent of them were actively investing in crypto assets,” Zettler says. The firm says it now has about $60,000 in Coinbase assets linked up to its platform.

Commandiv’s roots trace back to Zettler’s time at SeaStone Capital, when Zettler says that for his personal investments, he knew which strategies he wanted and the allocations he desired, but didn’t have time to actually maintain his own portfolio that consistently rebalanced itself to execute on both fronts. After Zettler left SeaStone in 2015, he built the technology to do just that as a programmatic solution on top of his wealth management platform of choice, Interactive Brokers. “So then I started offering it to my friends, saying ‘hey, you just tell me what you want to be invested in, I’ll plug in your positions and then output all the trades',” he says. “Eventually, the number of people coming back to me asking for the trade recommendations became large enough to where I saw that this was an actual company.”

Algorithmic trading was the draw for 27-year-old James Underhill, who manages his traditional brokerage funds, IRA and now Coinbase account on the platform. "It allows for me to get a birds-eye view on my entire portfolio, inclusive of my crypto assets which are traditionally not linked to any finance platform... So I can see how much my crypto assets are versus traditional domestic stocks and international growth markets, and be able to balance that out, take profits off the table and make sure I'm not too leveraged in any particular asset class." A consolidated platform for crypto and stocks along with rebalancing tools were similar draws for Fordham University finance student Naasik Islam, who first met Zettler at a New York co-working space and now also primarily manages his investments via Commandiv. They're prime examples of the busy, young professionals with investment opinions that Commandiv targets.

Commandiv

Courtesy of Commandiv

On the broader front, moves to facilitate cryptocurrency integration with existing trading platforms have been cautiously slow, and understandably so. While the market’s certainly moved in a direction that may encourage activity from large banks and trading firms, regulatory uncertainty and volatility pose risks that may trickle down to the firms’ firmly grounded core business lines.

Coinbase and Fidelity Investments announced in August that the two were testing a feature to allow Fidelity customers with Coinbase accounts to view their crypto asset balances in their Fidelity portfolio summaries. “Bitcoin and other blockchain technologies are emerging from their infancy but mass adoption is still many years away. And don’t underestimate their disruptive nature," said Fidelity Labs Managing Director and Senior Vice President Hadley Stern at the time. The partnership was carefully introduced as a pilot to, as stated in the release, discover whether digital asset holdings should play a role in one's overall financial picture.

Meanwhile, the lines between traditional asset and cryptocurrency are drawn for Commandiv as well. “When it comes to the crypto side, we don’t give investment advice, we only provide rebalancing software. Similarly, we don’t charge any advisory fees on the crypto assets that are linked up to the account,” says Zettler. “What we allow clients to do is trade the crypto and use our rebalancing software so that they can set their own target portfolio and manage their wealth more easily on the crypto side.”

For Commandiv’s future, Zettler says that as competition sprouts up in the combined crypto- and stock-trading field, the firm sees an opportunity to eventually broaden the number of tradeable crypto assets on its platform, allow coin-to-coin trading and provide greater fiat liquidity.

And when it comes to investing in a volatile, new market, tried-and-true diversification is key, says Zettler. “Keep any investment in the crypto space as a small and manageable percentage of your total wealth so that if it cut in half, it wouldn’t keep you awake at night.

“I have seen what has happened to individuals who’ve lost large amounts of money in the dot-com crash and in the latest financial crisis. And generally, the people who did the worst and lost the most in both of those crashes were those who had all of their eggs in one basket.”

I'm a reporter at Forbes focusing on wealth and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism

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I'm a reporter at Forbes focusing on wealth and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC's Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.